When the whole world dumps dollars, what exactly are they going to do with them? You can't eat 'em. "They will buy Euros and Yen and gold". Fine, but somebody takes the other side of every transaction. The dollars don't disappear. Whoever ends up with them does something with them. What?
They either hold them just as they do now, as currency reserves. Or they spend them on real exports from the US. There are no other options.
If they want tons of export goods, it doesn't make much sense to worry about lots of imports or loss of US jobs. If they hold them, it doesn't make much sense to worry about loss of US purchasing power over our own imports.
If they all do the same thing at once, they get a vastly worse price. They sell dollars back into the US, when it is weak. Meaning we wipe out the overhang on relatively favorable terms. (The effective US money supply is also goosed, unless the Fed deliberately counteracts this).
There can indeed be economic dislocation costs from changing the direction of flows, from changing the detailed pattern of demand, helping this and hurting that industry or service. And there can be financial disruption. But none of these things are the cause of US prosperity and economic growth.
That is caused by real productivity of US workers and industry. Which is high, about the highest in the world, and increasing. The US economy continues to grow 3-4% per year like clockwork. Can we have a recession for a year due to dislocations, and slower growth for a couple years? Certainly. We had that when the stock market fell. But it didn't end the world, nor did the economy stay down for long.
Because, for the nth time, US prosperity is caused by US work, not by foreigners' currency speculations.
Those who bet against the continued vitality of the US economy are always wrong. As wrong as those who bet against the US military, proclaiming quagmires everywhere. They do not understand the underpinings of US successes. They imagine they are all some kind of trick, smoke, exceptional and temporary. They are nothing of the kind.
I look in all the retail outlets and I don't find many, if any, American made goods. Those that I find, the components are made overseas.
Regardless of the dollar doing this or that, or the dollar is worth this or that, people have to eat, wear clothes, travel, heat their homes, use a vast variety of goods. How can our economy, whatever its instant state, remain stable when we become dependent on the goodwill and continued "friendship" with foreign economies that are set up and governed differently than ours?
And the forms of governments thereof are antitheses to our form, and don't particularly like us very much, anyway? Some trade with these nations to get products we can't or don't make here, yes, but dependence?
I have figured on the subject of foreign trade. Why do we need foreign trade to any great extent for the good of our country? Why not just produce what we need and sell to each other, exporting excesses where appropriate and importing specialty items?
